takeover bid strategy - a very interesting read...

Should you chase the takeover targets?
In 2004 it seemed that every second high-profile firm around the world was either taking a firm over or being taken over itself. In the US, Cingular bought AT&T Wireless, for example, and, in the UK, Banco Santander bought Abbey National, and the on-off saga of Marks & Spencer (M&S) occupied column inches for weeks on end. But according to the investment bankers, we havent seen anything yet. Theres no reason to doubt their prediction. As John Plender points out in the FT, they know at first hand what is in the merger and acquisition (M&A) pipeline. And if they are right, its excellent news for investors: share prices tend to soar when bids are announced.

Take the case of Aggregate Industries. Three months ago, Sandy Cross of Williams de Broe tipped the building materials firm in MoneyWeek at 95p, saying that it looked a manageable size for a predator. He was right. This week, Switzerlands Holcim said it intends to bid $1.78bn or 138p a share for Aggregate Industries. Today, the shares are trading at around 145p - anyone who bought in November is sitting on a 53% gain.

So if this really is the start of the year of the deal, wheres the best place for investors to place their bets? There is scope for consolidation in all sorts of sectors, from telecoms equipment to travel, all over Europe, but in the UK it is the retail sector that is getting all the attention. Analysts have long been warning that British retailers were going to have a nasty end to 2004 and a worse beginning to 2005, and Christmas seems to have been every bit as poor as the pessimists feared, says Chris Brown-Humes, also in the FT. Higher interest rates, a weak housing market, record levels of personal debt, higher utility bills and increased public transport costs are all squeezing the ability and desire of households to keep spending. The result? A lot of our retailers are suffering and that could make them easy pickings for predators. Indeed, one of the only things supporting retailers share prices right now is the prospect of takeover activity.
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Venture capitalists are still on the prowl, as is the Icelandic retailer Baugur, and Tesco and Asda might make a move on a rival. All of which leaves investors simply having to guess who the targets will be.

Betting on who they might be has become the latest City investment craze, says Simon Nixon on www.Breakingviews.com. But it isnt hard. M&S and JJB Sports saw their share prices rise even as they announced rubbish numbers as investors calculated this increased the likelihood of a takeover. Perhaps Philip Green will comes back and have another go at M&S.

Other possible targets include J Sainsbury, N Brown, MFI, Matalan and French Connection. But is betting on these firms wise? Debt is now cheap and plentiful, so potential bidders are awash with cash, but if the spending downturn gathers pace, that will change and takeovers will suddenly be harder to finance. And not all the dogs of the retail sector will be rescued by a bid. Some will just go bust instead. As Simon Watkins points out in The Mail on Sunday, some already have. Since Christmas, Scottish carpet maker Stoddard International has gone into administration because of tough trading at its key customer Allied Carpets, and fashion chain Pilot went into receivership as sales fell. These were both private companies, but the lesson is clear. If you are chasing takeover targets, make sure you go for firms that will survive even if they are forced to go it alone.

Woolworths is every inch a major takeover and worth following, a great opportunity if it materialises, the time is ripe once again -58p was recent target price.
remember Doing your research reaps rewards.

Hopw many shares did they buy-back - Grief it musdt have been nearly the whole company, or was it a stock manipulation that made the sp move?

I'm with Tipton11 on this - being unaware of any company that has benefited shareholders by a Buy-back programme. There are always far-better uses for the cash - special dividend to shareholders, cash for a rainy-day, reducing overdraft. But far better to keep it safe.
As soon as a co (with a falling sp) creates a rise (by buying its shares), that triggers other sellers and the sp falls back. Why else would the market not react?

Far better to sack Directors who cannot thing what to do with company profits.
( are profits so rare, I wonder?)

Talking from a purely trading point of vue...there could be some money to be made in the ups and downs in this one....!

Share buy backs are tax efficient.

And lucrative for management.
2517

an increased dividend is always extremely tax efficient for me, halifax

Final results due next week, will the dividend be reduced/maintained/increased? Yield around 17% is it sustainable? What is the sensible course of action for the directors to take?

This might rise in expectation....as long as the dividend is not cut completely...I do not want to sound like ramping...even though Woolies does sell crap at times the company has always been a favourite for the consumer in the high street and it has the potential to turn around and perform better.... 10p to 11p a share...sounds undervalued to me!

Halifax....when are the finals due ?...last year I think it was around 25/4/07....is it really next week ?...I cannot see an announcement !

rf go to Woolworth's web site shows preliminary results will be announced on 2nd April 2008

Thanks halifax.

woolies up 7% today sofar - results tomorrow

Will the dividend be slashed,will the company be broken up, will WLW sell its share in the BBC joint venture , will Baugur sell its shareholding to raise much needed cash, or will the directors ignore all this and just carry on regardless?!!

how about 10% div tomorrow

Tune in to RNS at 7am tomorrow and all will be revealed but meantime dont hold your breath!

I'm probably wrong....but I will be surprised if they don't cut the dividend !, by the way : I took some profits a couple of days ago !, (perhaps too soon).

oops sorry about that but 50% right !

I read 87%.

This is not attratcive to me now no spin off of anything.

it is to me--I'm a contrarian!!

in the Daily tele this morning they are recomanding a sell on the share

it reads as follows Sell @( 11p this weeeks price) sugests Cridit Suisse.
recent full year results from this troubled genral retailer were in line with consesnsus expectations.On an underling basis the resuls showed that the retail losses only improved by &6.1m with operating cost rations still increased. With woolworths depending on Christmas trading in deciding the full years profit ,the ongoing concerns surrounding connsumer demand are likley tonegatively affectley the share price

thanks P but I'm still going to hold on--the value of one section of their multi sections of the business is worth more than the mkt cap at this price. They own prime city centre leases,linking up with somerfield, still pay a reduced divi and Bauger own a huge chunk and is waiting in the wings!! I hope they stay down for a while as I can add to my isa holding. I can remember when CKSN 25p and BE 5p were on their knees and I sold out----look at them now!